St. Paul officials are applying for $46 million in federal stimulus funding, so that the city can purchase and renovate hundreds of area distressed homes.

The city currently has over 19,000 properties sitting vacant due to foreclosure or abandonment. These vacant properties cost St. Paul coffers $38 million annually. City officials commented that the stimulus funds would better equip the city to address the growing number of foreclosures in St. Paul.

Should St. Paul be approved for the funds, the stimulus dollars would go toward purchasing 400 area homes. The city would renovate 300 of the homes and demolish the other 100 properties. A portion of the funding would also go toward providing incentives for 300 homebuyers to purchase vacant properties in targeted areas.

Mayor Chris Coleman stated that he thought the funds would help the city take their “neighborhood investment strategy to the next level.” The intent in turning around the distressed properties is to attract new families into the neighborhoods and create new jobs in the community.

History reveals that when massive properties are rehabbed in an area, the city and its citizens reap great rewards. Homeowners in the area experience increased property values. Cities realize the revenue associated with the increased property values via the mill rate applied to the properties. In addition, the city no longer has to spend money looking after particular abandoned properties.

Let’s face it, folks. Distressed property in an area discourages real estate sales. Homebuyers aren’t typically interested in moving into an area that is run down. Renovated property, on the other hand, encourages real estate sales.

If the monies are used wisely, the situation would be a win-win for the city and homebuyers who agree to purchase the vacant properties, along with homeowners in the targeted areas.

The U.S. Department of Housing and Urban Development (HUD) has $1.93 billion in stimulus funds set aside to support what is being called “neighborhood stabilization programs.” Targeted St. Paul neighborhoods would fit the bill for the funds. HUD should be announcing the recipients of the awards in September.